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ABLE savings account program launched in NY

August 18, 2017
 

The NY ABLE program launched in August, allowing people with disabilities in New York state to open tax-advantaged savings accounts without affecting their eligibility for federal benefits such as Medicaid and Supplemental Security Income (SSI).

The program was authorized by the Achieving a Better Life Experience (ABLE ) Act, a 2014 federal law. After the federal law was passed, states began setting up their own programs, including New York. Called NY ABLE, New York’s program is administered by the state Comptroller’s Office.

ABLE accounts can be set up by a person with a disability, their parent or legal guardian, or someone with power of attorney. To qualify, a person must have been disabled by the age of 26. Only one account is allowed per beneficiary.

The annual contribution limit is set at $15,000, and the accounts can have up to $100,000 without impacting eligibility for SSI or Medicaid. Typically, someone can only have $2,000 in savings or assets to qualify for SSI or Medicaid.

Anyone can contribute to a person’s ABLE account, and the funds can be invested. There are four investment options, ranging from conservative to aggressive.  There’s also a checking option, which earns interest and allows the account holder to write checks or use a debit card.

ABLE accounts grow tax-free and withdrawals are not taxable, as long as they are used for “qualified disability expenses” which maintain health, independence or quality of life.

Qualified disability expenses include housing, education, transportation, job training and support, health and wellness, assistive technology, personal support services, financial management and legal assistance.

There is a $45 annual fee to maintain an ABLE account ($55 if paper statements are mailed), and an annual investment fee of .40% if the investment option is chosen.

ABLE accounts are designed to be simpler and less expensive to set up than special needs trusts, the other primary savings vehicle for people with disabilities. Also, unlike a special needs trust, an ABLE account is owned by the person with a disability and can be directly accessed by them.

However, special needs trusts have some advantages. For example, trusts aren’t subject to the $100,000 cap regarding SSI and Medicaid eligibility. Also, the state can recoup remaining funds in an ABLE account to repay Medicaid costs after the beneficiary’s death, while a trust can be sheltered from Medicaid payback.  

It may be beneficial to use both a special needs trust and an ABLE account. Consulting a financial planner may help with these decisions.

For more information about NY ABLE, go to the state’s website, mynyable.org, email clientservices@mynyable.org or call (855) 569-2253. Applications can be done online at mynyable.org, and paper application forms can be downloaded on the website.

Another resource is the ABLE National Resource Center, which is backed by a coalition of national disability organizations and is leading a nationwide awareness campaign about the ABLE Act. Detailed news and information about ABLE accounts is posted at ablenrc.org.

AIM Independent Living Center does not offer enrollment services, but has advocates who can help consumers and their families understand NY ABLE and get further assistance.